From Chapter 15

Research on Safe Withdrawal Rates

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JWR1945
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From Chapter 15

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Chapter 15 of our featured book, Common Sense on Mutual Funds by John Bogle, addresses principles that should apply to all mutual funds but, sadly, do not. He decries the fact that marketing has gained a greater influence than responsible management. Looking down the road, he expects that only an extended period of poor returns in the stock market will bring about the reform of the industry. As long as returns are high, few investors will pay attention to such things as excessive fees.

I have decided to extract a couple of quotes to pique your interest (with emphasis added).

From page 325: "For whatever reason, the fund with the highest (conventionally measured) return in the entire industry - annually, about 20 percent per share - in the decade ending July 31, 1996, had a dollar-weighted return on -4 percent during that same period. There is a difference, and investors should be aware of it. Urge your fund to report dollar-weighted returns along with time-weighted returns, in its prospectuses and annual report.*"￾

From the last line of the footnote: "In effect, the dollar-weighted return reflects the experience of the average investor who owns the fund's shares."

From page 329: "Investors owe it to themselves to be aware that traditionally managed mutual funds are not the only way to invest. Holding individual stocks for the long term may not only be wise, but far more tax-efficient. And market index funds are also a promising, if counterintuitive, choice."

From pages 329 and 330: "It is also time to focus on, not merely index funds, but low-cost index funds....Some 40 index funds have sales charges, and 25 others have expense ratios of 1 percent or more."

Have fun.

John R.
peteyperson
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Re: From Chapter 15

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